House of Commons Hansard Debates for 26 Apr 1989

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(8CC) If the Secretary of State considers it reasonable to do so in any particular case, he may give the authority in question written notice extending any of the periods prescribed under subsection (8C) above for the purposes of paragraph (a), (b) or (c) of that subsection, as the case may be.'.-- [Mr. Peter Lloyd.]

Clause 16

Unauthorised disclosure of information relating to particular persons

Amendments made : No. 63 in page 14, line 12 at end insert or in any corresponding enactment having effect in Northern Ireland'.

No. 64, in page 14, line 20, at end insert--

(3A) It is a defence for a person charged with an offence under this section to prove that at the time of the alleged offence-- (

(a) he believed that he was making the disclosure in question with lawful authority and had no reasonable cause to believe otherwise ; or

(b) he believed that the information in question had previously been disclosed to the public with lawful authority and had no reasonable cause to believe otherwise.'.

No. 65, in page 14, line 29, at end insert

or in any corresponding enactment having effect in Northern Ireland'.

No. 66, in page 14, line 32, after Schedule', insert or that corresponding enactment'.

No. 67, in page 14, line 38, after Act', insert

or in any corresponding enactment having effect in Northern Ireland'.

No. 68, in page 14, line 39, after Schedule' insert

or any corresponding enactment having effect in Northern Ireland'.

No. 69, in page 14, line 44, at end insert--

(aa) the Comptroller and Auditor General for Northern Ireland ;'. No. 70, in page 14, line 45, at end insert--

(bb) the Northern Ireland Parliamentary Commissioner for Administration ;'.

No. 71, in page 15, line 1, at end insert--

(ee) the Northern Ireland Commissioner for Complaints ;'. No. 72, in page 15, line 2 after Office' insert--

or of the Northern Ireland Audit Office,

(ff) any other person who carries out the administrative work of either of those Offices, or who provides, or is employed in the provision of, services to either of them ;'.

No. 73, in page 15, line 4 leave out to (e)' and insert (bb) and (c) to (ee)'.

No. 74, in page 15, line 9 leave out paragraph (a) and insert-- (a) in accordance with his official duty--

(i) by a civil servant ; or

(ii) by a person employed in the audit of expenditure or the investigation of complaints who does not fall within subsection (7)(ff) above ;'.

No. 75, in page 15, line 12 person', insert either (i)'. No. 76, in page 15, line 16 leave out (c)' and insert or (ii)'. No. 77, in page 15, line 25 at end insert

and includes a reference to "the person responsible" within the meaning of any corresponding enactment having effect in Northern Ireland.'.

No. 105, in page 15, line 31, leave out from 1983' to as' in line 34 and insert

or any corresponding enactment having effect in Northern Ireland,

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(i) a curator bonis, tutor or judicial factor, or

(ii) the managers of a hospital acting on behalf of that person under section 94 of the Mental Health (Scotland) Act 1984, or (

(d) by a mental health appointee, that is to say--

(i) a person directed or authorised as mentioned in paragraph (a) of rule 41(1) of the Court of Protection Rules 1984 or any similar appointee in Northern Ireland, or

(ii) a receiver ad interim appointed under paragraph (b) of that rule, or any similar appointee in Northern Ireland,

the appropriate person is the attorney, receiver, custodian or appointee,'.

No. 80, in page 15, line 36, at end insert--

(10) This section shall come into force with the repeal of section 2 of the Official Secrets Act 1911.'.-- [Mr. Scott.]

Schedule 1

Persons employed in social security administration or adjudication

Amendments made : No. 83, in page 24, line 37, at end insert-- A benefit officer.

An insurance officer.'.

No. 84, in page 25, line 10, after or', insert--

to occupational or personal pension schemes or to'.

No. 85, in page 25, line 12, after above' insert--

"occupational pension scheme" has the meaning given by section 66(1) of the Pensions Act ;

"personal pension scheme" has the meaning given by section 84(1) of the 1986 Act ; and'.

No. 86, in page 25, line 16, at end insert--

or related to the former supplementary benefit'.

No. 27, in page 25, line 19, leave out by persons in it'. No. 87, in page 25, line 23, after to', insert (a)'.

No. 88, in page 25, line 27, at end insert--

; or

(b) the tax treatment of occupational or personal pension schemes, as defined in paragraph 1(2) above.'.-- [Mr. Scott.]

Clause 19

Recovery of sums equivalent to benefit from compensation payments in respect of accidents, injuries and diseases

Mr. Flynn : I beg to move amendment No. 104, in page 16, line 13, at end insert

"(less any amount by which the compensation payment would have been greater but for the contributory negligence of the victim".

Mr. Deputy Speaker : With this it will be convenient to discuss amendment No. 6, in page 16, leave out lines 42 and 43 and insert-- (c

(only to the extent that any part of the payment is, or in prescribed circumstances is deemed to be, for a prescribed purpose other than reimbursement for costs incurred in procuring the payment and does not exceed the amount of benefit, determined under subsection (1)(a) above, paid or likely to be paid for the same purpose,)

but'.

Mr. Flynn : In view of the disagreement that we had on a previous amendment, there is a real prospect of a collapse of understanding between the two sides of the House. It was apparent in Committee that we were not talking about the same thing. Clause 19 is a fine example of how a Government bent on reform will act. We must say a grudging word of congratulation because the

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Government have tackled an extremely difficult problem. However, if one decides to do that, there is always a great danger that one will make the position worse. In many ways the Government have turned an untidy state of affairs into an unjust one and created chaos out of confusion. In Committee we withdrew an amendment similar to amendment No. 104 so that the Government might think again and so that good sense might prevail. The example given by the Minister in Committee was faulty.

The two areas involved in the clause are the possibility of over- compensation, a dread area of Tory demonology, and the possibility of someone getting away with something, especially someone who is not well off. The Government are worried that someone may gain a few pennies to which he is not strictly entitled. Because state benefits and compensation for accidents are given for different purposes, there is a serious conflict. It is impossible to match the two awards. It is like mixing oil with water. Compensation for damages is awarded for pain, for suffering, for loss of amenity and for loss of standing in the labour market. Social security benefits are paid for different purposes--for additional needs arising from disability or to meet losses that are suffered inevitably because of absence from the labour market.

The objection of the Minister of State to a similar amendment in Committee was that it might result in the dread over-compensation. He gave an example of what he called the perverse result that the suggested system would achieve, citing a case in which compensation was reduced from £10,000 to £5,000 due to contributory negligence and the injured party had received £2,000 in social security benefits. Under the Government's proposal the compensation of £5,000 would be reduced by a further £2,000 so that the Department of Social Security could get its money back and the person would receive £5,000 in total--£3,000 in compensation and £2,000 in benefit. The Minister continued on the same basis :

"if we follow the line taken by the amendment, the person would end up with £6,000, rather than £5,000. He would be over-compensated in total and the taxpayer would have to make up the difference."--[ Official Report, Standing Committee F, 2 March 1989 ; c. 867.] The Minister was wrong in Committee about the effect of the amendment.

Mr. Gerald Bermingham (St. Helens, South) : Is it not a fact that compensation is meant to pay for the physical injuries that a person has suffered and for the diminution in his earning power? Surely it is not meant to compensate the Government for benefits paid. Would it not be fairer if the Government accepted that compensation is a separate entity and that benefit should continue to be paid? This will clearly be a problem following the Hillsborough disaster.

Mr. Flynn : My hon. Friend has put his finger on the very point that I was about to make. The effect of the amendment would be to reduce the amount of benefit repayable to the DSS by the full amount of compensation lost due to contributory negligence. In the case that the Minister cited, the compensation payment was reduced by £5,000 due to contributory negligence. In those circumstances, the repayment of benefit would not arise unless the benefit amounted to more than £5,000 so that the total amount paid in compensation and benefit exceeded the figure at which damages were assessed. The

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total amount paid in the case that the Minister cited would be £10, 000. None of it would be repayable, so the person would end up with £7,000, not £6,000, but it does not matter whether the total is £6, 000 or £7,000 because the person has actually lost £10,000. I would need visual aids to explain the point properly. If we decide that the loss is £10,000, that is the loss--the total amount of money from whatever source, whether it be security or

compensation--which should be paid unless one takes the view that people ought not be compensated for any injury unless someone else was to blame. That is where we get into the strange and difficult interface between two benefits--compensation and social security. Such a decision would be startling and runs contrary to all the principles on which the social security system has always operated. A person who claims benefit as a result of food poisoning does not have to prove that someone poisoned his soup--he has to prove only that he is ill. The same applies to industrial injuries. The whole point of the industrial injuries scheme was to get away from the need to prove that the employer was to blame. If the injury arises from the job, benefit is payable in full whether or not there is contributory negligence on the part of the victim.

The logic of the Minister's argument is that someone who carelessly walks out on the road, is run over and is confined to a wheelchair for the next 40 years would not be allowed to draw income support, let alone invalidity benefit or mobility allowance, because there was 100 per cent. contributory negligence. According to the Minister, any benefit payment would be over- compensation. If that means anything, it must mean that a person has received more than he or she lost as a result of the injury. If that can be proved, there may be a case for the compensator or the DSS to recover part of the money.

Amendment No. 104 seeks to remove from the scope of clause 19 cases in which there is no possibility of over-compensation because the amount deducted for contributory negligence is more than the amount received in benefit. I can anticipate what the Minister will say about the practicalities because unless the compensation is determined by the court nobody will know what precise deduction has been made for contributory negligence. However, we had a great deal of evidence that in many cases the division was not made between compensation and deductions for contributory negligence. The Minister is creating a new situation. It is very much his problem. If he cannot find a solution that is both practical and fair, the recruitment arrangements cannot be operated in a proper way. The Government should accept that they have yet to find the proper answer and abandon the whole proposal.

9 pm

The Minister may also repeat his statement in Committee that the Government proposals were in accord with what Beveridge recommended in 1942. We have had an opportunity to re-read what Beveridge said in his report. The question of contributory negligence, which is crucial to the amendment, is not dealt with but at the end of that section of the report Beveridge wrote :

"It is not possible in this report to do more than to raise these questions. Considered answers can be given only by inquiry by some Committee with technical and practical qualifications and with time to examine all the detailed areas involved."

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It is wrong, therefore, to treat Beveridge as the final authority on this matter. In fact the compromise solution adopted in the Law Reform (Personal Injuries) Act 1948 took into account contributory negligence, deliberately departing from Beveridge's very tentative recommendations. We look forward to hearing how the Minister intends to find a solution which makes some practical sense or that he will withdraw the clause.

Amendment No. 6 was again similar to the one at Committee. We ran into difficulties and objections from the Minister, who suggested with some effrontery that it might produce a situation which was "excessively bureaucratic and legalistic". The Government are the authors of the change, so the obligation is again on them to achieve it without injustice. Unamended, the clause will certainly cause serious injustice.

Amendment No. 6 seeks to avoid the taking away of benefit which had been properly awarded and received. As the clause stands, benefits paid for one reason can be recovered out of compensation payments made for an entirely different purpose or even taken out of payments which are not compensation but reimbursement of the victim's costs. In Committee the case of Parry v Cleaver was cited, which provided that one should take away only those things that are like from like. The amendments that we put to the Committee were unacceptable, but they were not answered fully. The whole basis of the Government's argument is the need to avoid double compensation. If a person suffers an injury and receives social security benefits to compensate for loss of earnings and a payment of damages for pain and suffering, the payments of benefits and damages are for different and mutually exclusive purposes and cannot, therefore, be double compensation. The Government's proposals might possibly be defensible if all the victims of personal injuries received full compensation through the courts. Social security benefits would then be a kind of interim payment that it would be reasonable to deduct from the final compensation payment. However, in practice hardly anyone gets full compensation. Once again, the question of contributory negligence arises. That can result in the victim receiving partial compensation under a number of different heads of damages. If the whole of the benefits are recovered out of that partial compensation, it can mean, for example, that attendance and mobility allowances are recovered from damages that are paid for loss of earnings. That cannot be right.

The most blatantly unfair aspect of the proposal is the treatment of costs. Whatever justification there may be for recovering social security benefits out of payments of compensation for injury, there can be no conceivable justification for recovering them out of payments of legal costs. Yet the Government not only intend to do that, but actually amended the Bill in Committee to remove any doubt as to their intention. The amendment had the effect of adding to the definition of a "compensation payment" the words :

"and includes, in particular, so much of the payment as represents reimbursement for costs incurred in procuring it."

Amendment 6 would remove those words.

Mr. Bermingham : Has it not always been a fundamental principle of English law that where one succeeds in one's action one is entitled to succeed in one's action for costs? Is my hon. Friend saying that the

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Government are suggesting that because one is returned to status quo--that is, no costs--they have a lien on the money that one receives and that theoretically one could be put at a loss through winning one's case?

Mr. Flynn : That is precisely the Government's intention, and it will certainly be the effect of the amendment. I look forward to my hon. Friend the Member for St. Helens, South (Mr. Bermingham) making a contribution on that point.

The Minister argued in Committee that there should, in practice, be no problem in that area. The amount to be recovered should fall within the normal payments, excluding costs. That may prove to be true in most cases, but certainly not in every case. There will be cases in which the whole of the compensation payment, including the costs element, will be handed over to the DSS. That is especially likely in cases which take several years to settle, during which a large sum has been paid in benefits and substantial costs have been incurred. In such cases, the victim could end up not only without any compensation, but with a debt for legal fees. A bizarre situation could be created.

On that point as on many others, the Minister's main argument in Committee was that most compensation payments could not be divided into their constituent elements and, therefore, it was impractical to operate the like from like principle. Again, we appreciate the difficulty. That is probably the reason why no one has tackled this for a long time, but if it is impractical to operate that principle, either generally or in relation to cost--if it cannot be made to work fairly--that is no excuse for allowing this ragbag to go forward, which will work unfairly and unjustly and will breach

long-established principles of British justice.

Mr. Bill Michie : I want to follow what my hon. Friend the Member for Newport, West (Mr. Flynn) said about tried and tested traditions and the values that we have held in the past. Anyone who has represented people who have had problems through damage to their bodies caused at, for example, work will know that the compensation for victims of accident and disease is calculated on general damages for pain, suffering and loss of amenity ; special damages, which are the financial losses calculated up to date of trial or settlement, including loss of earnings ; loss of earning capacity, where, for example, the injury puts the victim at a disadvantage on the open labour market ; loss of services, where, for example, a mother is unable to perform household duties to the pre-accident extent ; and future financial losses, which are, for example, loss of earnings, pension loss and future expenses. All those have been valued in the past, but many are put in jeopardy by the clause.

For the past 41 years, the victim has given credit to the compensator for one half of the value of the relevant state benefit for up to five years from the date of accident, but that is only as against the loss of the earning claim. Under the present proposal, victims will have gross statutory sick pay and the prescribed benefit paid for a period of up to five years--depending on the date of settlement--deducted from the total compensation payment, even if the victim recovers compensation on the basis of less than 100 per cent. compensation. That is the point that my hon. Friend the Member for Newport, West emphasised. It is not as if the victim receives 100 per cent. compensation and value

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for money. Under the Government's proposals, all victims will be affected, whether they receive 100 per cent., 5 per cent. or 20 per cent. compensation.

I could quote many examples, but I have been asked to be brief to allow other hon. Members to contribute. However, I want to refer to the example of a man who is claiming general damages for pain, suffering and loss of amenities in the sum of £20,000. His special damages include loss of earnings and loss of earning capacity of £5, 000. They also include loss of future pension for which he receives £2,000. His pre-accident net earnings were £200 a week. He is off work for two years and receives company sick pay of £150 a week for six months and £75 a week for the subsequent six months. He receives no company sick pay for the second year's absence. He returns to work after two years, suffering a partial loss of earnings of £50 a week for two years. He receives statutory sick pay of £1,260 and sickness and invalidity benefit of £5,000. He also receives a reduced earnings allowance of £4,500 and industrial disablement benefit of £4,000 until the date of the settlement five years after the accident. Due to the serious medical condition, the case is not capable of earlier settlement. As the law stands, before the Bill is enacted, that man's full liability would be £39,140. Under the new set-up, when the Bill is enacted, he will receive £32,390.

As the percentage of compensation is reduced from 100 per cent., the victim receives less. At liability of 25 per cent., the man would receive at least £9,785. Under the new system, he would receive nothing at that level of compensation. It would all be clawed back. We tried to express that problem several times in Committee, but unfortunately to no avail.

There are many injustices in clause 19. One hundred per cent. state benefits paid to victims partially to replace income will be deducted from total compensation. The compensation will be recovered for even part payments for damages. Even if payments are very small, they will still be clawed back until someone is likely to lose more money by making a claim than by not making one.

The better-off victim who receives a fairly decent settlement would not claim social security benefit. However, the poor victim who has nothing must claim benefit, but he is penalised when he claims compensation to which, under the old law, he was entitled. My colleagues from the Amalgamated Engineering Union have had meetings and discussed these points. We have experience of industrial injuries. The AEU has a great record in that respect. The union is worried that the injustice will affect nearly all compensation claims in the long run. The Government should accept the amendment and, therefore, protect people who are already in a traumatic state as a result of their injuries. Even at this late stage, I hope that the Government will change their minds and accept the amendment.

Mr. Bermingham : I had not proposed to intervene in the debate until I saw the purport of the amendments and the purport of the clause. I should declare a passing interest as I am a member of the legal profession. Over the years I have been involved in many civil settlements, particularly when I was a solicitor in Sheffield. I do not believe that the Government or the parliamentary draftsmen have any comprehension of how the system of settlement actually works. It is not cut and dried. In the vast majority of agreed settlements, no specific figure is agreed for contributory negligence. We try

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to find a sum of money to compensate the injured party for the injuries he has suffered. In the old days half the benefits were taken into account in the assessment calculation. However, costs followed the event. If I read the clause correctly--and I hope that the Minister will disabuse me in due course if my interpretation is wrong-- all social security benefits will be included in the assessment. Where there has been a finding of contributory negligence, that will lie against the net figure due to the claimant after the deduction for contributory negligence.

9.15 pm

If we had been wise enough years ago to follow the Pearson report on no- fault liability, all these problems would have disappeared. The Government are trying to stretch their clammy hands to claw back any compensation. If someone is injured through the fault of another, that person must be the loser. The state will lose not a penny. The old compensation that would have been paid will no longer flow to the injured party.

The clause even claws back costs. That shows the draftsmens' ignorance and I can say that quite cold bloodedly. They do not seem to understand that in calculating whether to pursue a case the first question that any competent lawyer will ask himself is whether he will succeed in securing some compensation.

Mr. Bill Michie : Is my hon. Friend saying that somewhere in another place they will have a field day because of the legal technicalities and bad drafting?

Mr. Bermingham : My hon. Friend reads my mind perfectly and he knows me well.

Any competent lawyer will say to himself very gently, "Because of the length of the period of the claims to benefit, it may not be worth pursuing the claim." Any competent lawyer will say that he cannot leave his client in a position where, because of the clawback even against costs awarded, even if the client will receive a notional sum in settlement of the claim-- for the sake of argument let us say £20,000, with costs of £5,000 --unfortunately, because the client has been on benefit for five years, the DSS--and one is tempted to say that the Department is aptly named--will receive all the £25, 000 in payment. Effectively the victim will be £5,000 out of pocket simply for pursuing the claim. That is ludicrous. The Government must reconsider.

I will digress a little now because I have an interest in these matters as the hon. Member for St. Helens, South. What will happen to the contributions made to victims of disasters such as Piper Alpha or Hillsborough where many people on Merseyside and from St. Helens were killed or injured? There may be trusts that do not have charitable status and money may be paid out. Will the DSS try to claw back money paid to people who have suffered grievous loss through no fault of their own? Will the Government take their cut from the tragedy?

Mr. Stanley Orme (Salford, East) : That is highly unlikely because of the emotional attitude of people throughout the country.

Mr. Frank Haynes (Ashfield) : Oh, I do not know.

Mr. Orme : My hon. Friend may disagree with me there. However, does my hon. Friend the Member for St. Helens,

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